Target Breach: Why Smartcards Won’t Stop Hackers

"Chip and PIN" smartcard adoption in the United States is long overdue. But the security improvement wouldn't have stopped Target's BlackPOS malware attackers

Say what you will about "smart" credit cards or EMV card-security technology: None of it would have prevented the recent theft of shoppers' credit card information from Target and Neiman Marcus. But that doesn't mean that it isn't high time our credit cards sported EMV-compatible microchips.

Cards compatible with the EuroPay, MasterCard, and Visa (EMV) standard have been widely adopted in about 80 other countries, and are easily spotted by the microchip on the face of the card. When the card is used for in-person purchases, the cardholder must first insert the card into a point-of-sale (POS) card reader and enter a four-digit PIN code -- verified by the chip -- to authorize the transaction. After three wrong attempts in a row, typically, the chip will lock itself.

Chip and PIN EMV isn't perfect, but it has been tied to a decrease in overall levels of fraud, once countries stop authorizing payments from an EMV card that's been swiped, says Dan Ingevaldson, CTO of Easy Solutions. Indeed, card-not-present attacks -- via phone, Internet -- comprised the majority of fraud in EMV-using Canada (61%), Germany (70%), and the UK (63%) in 2012.